Novogratz was speaking at the Piper Sandler Global Exchanges & Brokerage Conference in New York.

The current downturn in the crypto market could exact a huge price from hedge funds according to Mike Novogratz, the founder and chief executive officer of Galaxy Digital Holdings Ltd. (TSE: GLXY) Speaking at the Piper Sandler Global Exchanges & Brokerage Conference in New York, Novogratz said the Fed’s removal of stimulus led to a correction in the broader financial market, in turn triggering a collapse in crypto prices. As a result, a large number of crypto hedge funds could fail. (Yahoo News)

Hedge funds may shutter

“Volume will go down, hedge funds will have to restructure,” Novogratz said. “There are literally 1,900 crypto hedge funds. My guess is two-thirds will go out of business.”

He attributed the implosion last month in the TerraUSD stablecoin, and its affiliated Luna token, to macroeconomic forces rather than any inherent flaw in the project.

“It wasn’t strong enough to deal with the headwinds of Bitcoin prices going down, crypto prices going down. It was a catastrophic loss,” he said. “The CEO was unbelievably bright and charismatic and there was a tremendous amount of momentum behind what he was doing.”

Galaxy was a heavy and early investor in Terra, and Novogratz was a fan enough to famously tattoo the Luna token on his arm.

However, a Bloomberg report said Terraform Labs and its CEO Do Kwon are to be investigated by the SEC for questionable marketing prior to the meltdown of the UST stablecoin.

Galaxy to press on

Unfazed by these negative developments in the crypto market, Novogratz said Galaxy would continue to expand and be ready for the turnaround.

It would be the “go-to-place” for crypto, he added.

Related Story: The Terra (LUNA) Implosion – Sidelights

Image of Mike Novogratz (2018): Wikimedia Commons